A comparative analysis of music streaming and data costs: SA vs US

Market comparison

Although more than 140% growth on average in music streaming is reported in Africa the relative growth of the market is not on par with music markets around the world. The US statistics indicate that music streaming, for the fourth consecutive year, recorded double-digit gains with the total recorded music revenue jumping from $9.8bn in 2018 to $11.1bn in 2019, representing a 13% increase. At 79% streaming revenues contributed the most to the recorded market, this is according to the RIAA report (summary attached below).

This indicates how digital music streaming has evolved music markets around the world in the last decade. In SA, based on 2018 data, total recorded music revenue including podcast revenue was R1.017bn. Music streaming contributed R325m, representing 32% of the total recorded music market. The contribution will rise to 51.8% in 2023, based on the forecasted growth rates. Statistics for 2019 were not readily obtainable. This shows that three years ahead the relative growth in the music streaming market in SA will not perform as well as the US music streaming markets did last year.

As a side note, more than 60.4 million Americans paid for music streaming in 2019. This was a giant leap from the less than 11 million Americans who were subscribed to premium music services in 2015. A reliable statistic for paid subscribers in SA could not be found. But a study conducted in 2016 showed that although there was a high interest to subscribe to paid music streaming services in the country, the majority of South Africans stop using the facility in the end.

Music streaming revenue per capita

Based on US population of 329.45 million (US Census Bureau's population clock), music streaming revenue per capita is $33.69. This is each individual’s contribution to the country’s total music streaming revenue. In comparison, 57.9 million South Africans each yield R17.55 ($1.067 on XE).

A simple illustration using the Big Mac Index (BMI), an economic indicator which accounts for purchasing power parity thus adjusted exchange rates to show the the real value of the rand, SA music streaming revenue per capita, using the current index of 2.15 can buy almost half (0.49) a Big Mac burger, whereas the US streaming revenues per capita, at and index of 5.67, can get almost six burgers (5,94). This means US citizens are contributing 12 times more streaming revenue than their counterparts in SA. This, despite South Africa having a bigger appetite for with more music fanatics/lovers (75%) than the US (62%), as well as the global average (54%), according to the IFPI report.

Number of hours listening to music

South Africans also listen to more radio (7hrs) than the global average (5.4hrs). More than 35 million people listen to radio stations in the country, with approximately 28.6 million tuning in every day (2016 data). The global average time spent listening to music is 18hrs which we can assume should be higher in SA. However, on average only 1 hour and 7 minutes per day are spent streaming music in South Africa (We Are Social, 2018).

The majority of users access internet on mobile devices making mobile data a significant factor in determining accessibility. A total of 31.18 million active internet users of which 28.99 million active mobile internet users (Statista, 2019).

Data

The Alliance for Affordable Internet says data accounts for a larger portion of South Africans when compared to their counterparts in the US. The organisation defines affordability as the price of 1GB of mobile broadband data that does not exceed 2% of average monthly income of a person. In Africa, 1GB of data costs roughly 8% of income of the average person, this compares to only 2.7% in the US. Essentially, if the US consumer paid the same amount for 1GB of data as SA, data would cost more than R300. A breakdown of the figures and calculations were not provided.

A test conducted by My Broadband established that on a Spotify premium audio quality rate of 320Kbps using a mobile phone, 10 hours of music streaming per week would cost R42.03.

Based on 18hour global average, assuming the listeners only listened to music through a streaming service, if they were to convert from radio to music streaming it would cost more than R302,62 p/m (R75.7x4) for streaming along in addition to subscription services. Accounting for roughly 10% the monthly income of minimum wage earners, which is majority of South Africans.

Required working hours to get 1GB in SA versus US

Using the average of data in each country and the minimum wage shows much the average South African would have to work to acquire 1GB of data compared to their counterparts in the US. In SA, the average cost of purchasing 1GB is R106, compared to $13 in the US. Given the current minimum of R20 per hour in SA, it would take minimum wage worker 5.3 hours to acquire 1GB of data. Whereas in the US, with a minimum wage of $7.25 it would take 1.7 hours to get 1GB of data, more than three times less the time taken in SA. The time becomes significantly less (1,05) in states like California where minimum wage is $12 per hour. And considering the majority of US workers earn significantly higher than the minimum wage, most Americans work less than an hour to get 1GB data. But in SA the majority of population makes minimum wage. In fact, more than 29% of the population earns less than the national prescribed minimum wage. And the majority needs to work more than 5 hours of work must be put in before getting 1GB of data. At the high unemployment rate of 29% (3.5% in US) access to the internet let alone music streaming continues to be an elusive luxury.